The Federation of Bosnia and Herzegovina (FBiH) entity Deputy Prime Minister and FBiH Finance Minister Jelka Milicevic said that every FBiH citizen will be encompassed by the new laws on contributions and income tax which the Government has recently established and submitted to parliamentary procedure in the form of drafts.

This fully regulates the area and avoids inequality in terms of rates, bases and obligations for contributions, the FBiH Government said.

Neither the employers nor trade unions are satisfied with the proposed laws. If these laws are adopted, the employers will be exempted from paying income tax for up to BAM 700 (around EUR 350) per month. Beyond that, everything will be taxed, apart from the salary, the Law taxes meal allowances and refunds.

Income from BAM 700 to BAM 1,500 (around EUR 700) will be taxed by a 10 percent rate, and the income that is above BAM 1,500 will be taxed by a 20 percent rate.

The proposed legal solutions provide for a reduction in the aggregate contribution rate from the current 41.5 percent to 33.5 percent.

This way, the FBiH Government said the laws will have a neutral effect on salaries. But for both the FBiH Employers Association and the trade unions, this is not a neutral effect.

“The position of the union is known from before, we are asking for the removal of taxes from wages of up to BAM 1,000 (around EUR 500), which will now be the average wage and we cannot exclude the possibility of protests if the Government continues to persist on its legal solutions,” the Confederation of Independent Trade Unions of Bosnia and Herzegovina said.

The Employers Association said they are convinced that the Law will not pass the parliamentary procedure.